The Decade of Climate Change and Peak Oil

It is true that on a list of twenty issues presented to the American people in a 2009 Pew survey, climate change came in dead last. But this is a mistake of perception and judgment. These issues really should be at the top of the list; even above the ailing economy (#1 on the list) because the economy is a subset of the environment, not the other way around.

The year 2009 was the year of the United Nations Copenhagen summit, in which the most heads of state in history convened at the same place, and the year of “climategate,” in which hundreds of emails between various climate scientists were hacked. A quick review of the alleged smoking gun emails reveals, however, nothing of the sort. Yes, the scientists were guilty, in private conversations, of seeming a bit overzealous in their desire to keep the views of climate naysayers out of the journals. But even if the worst claims about the emails were true they would do practically nothing to contradict the broad consensus regarding the human influence on past climate (what is less certain, as any good scientist will tell you, is the amount of future warming we can expect from existing and future greenhouse gas emissions).

Despite the broad consensus on global warming’s key points, however, most objective observers believe that the United Nations Copenhagen summit in December was an unmitigated disaster. What was expected before the negotiations was far more than what actually came out — somewhere along the way negotiations broke down.

What was completed, the Copenhagen Accord, is a document signed by many of the largest emitters as a voluntary statement of intent to limit global emissions to avoid any more than a 2°C increase in global temperature and to provide about $30 billion in mitigation funds by 2012. And that’s pretty much it in terms of substance. It’s not legally binding in any way and even if it were it doesn’t have individual nation numerical targets. The best we can say of the accord is that it is a small step in the right direction. Or perhaps a slight shuffle of the world’s feet is a more accurate description.

At the national level, we have a bit more cause for optimism: the $80 billion or so devoted by Congress and the White House to energy efficiency and renewable energy is working its way through the U.S. economy. Even with the recession, the energy efficiency, solar, wind and geothermal markets have remained fairly robust — just not as good as we would have predicted based on the growth trends from the previous eight years or so, which were remarkable. The federal cap and trade bill seems DOA, due to conservative and moderate resistance, but perhaps a national renewable electricity standard could be passed as a backup plan? This would go far. A federal carbon fee would go even further, but its political prospects are, unfortunately, probably even worse than for the cap and trade bill.  

In California, where all good things begin (so we like to think), AB 32, the Global Warming Solutions Act, which passed in 2007 and put in place the first state-level greenhouse gas emissions cap, continued through to wend its way through the regulatory process. The Air Resources Board released its draft rule for implementing AB 32, with a cap and trade program that will come into force in 2012 — unless former Ebay chief Meg Whitman wins the gubernatorial race and, as she has pledged, suspends AB 32 as her first act in office. Pray Jerry Brown makes his way back to the Governor’s mansion; though why he would actually want that job again is beyond me…

Governor Schwarzenegger also signed an executive order directing the Air Resources Board to implement rules for a 33% renewable electricity standard — after vetoing two bills that would have done the same thing with more oomph, and which couldn’t be simply overturned with the stroke of a pen by the next governor. To ARB’s credit, the proposed rules look quite good at this point and, if these rules are passed with real teeth, promise to be a powerful new impetus for more renewables in and around California. And as California goes, so goes the nation (or so we like to think).

Despite my general optimism about the future, I still worry greatly about the threat of peak oil, over and above the threat of climate change (as I’ve written about in numerous columns). Peak oil and climate change are integrally related because both concern our unsustainable use of fossil fuels. Solving climate change will also solve peak oil, but solving peak oil will not necessarily solve climate change. This is the case because some remedies for peak oil, such as tar sands, oil shale, coal to liquids, etc., will make the climate change problem far worse because of even higher greenhouse gas emissions.

An important, but almost completely overlooked, story in 2009 concerned the International Energy Agency (IEA), based in Paris. The IEA is the western nations’ energy watchdog, formed after the oil shocks of the 1970s. Its mission is to ensure no similar events occur again. As such, it is considered the authority on international energy statistics and policy recommendations. Its annual World Energy Outlook (WEO) is eagerly awaited each year.

IEA finally started listening to the peak oil crowd and completed a supply-side analysis in 2008 of the world’s 800 biggest oil fields. In previous analyses, IEA had projected oil and other fossil fuel demand based on economic modeling and simply assumed (literally) that supplies would meet this projected demand. The 2008 WEO used a slightly different approach. Rather than simply assuming supplies would meet demand, IEA looked at the largest oil fields and calculated their rate of production and decline (this is what a “supply-side analysis” means). They found that these fields were declining far faster than previously assumed, about 7% per year rather than 3.5% per year.

Based on this decline rate, IEA calculated that the world would need eight new Saudi Arabias by 2030 to meet projected demand. In the medium-term, they projected a likely “oil supply crunch” by 2015 because we’d need three to four new Saudi Arabias by then to meet projected demand.

IEA also included a detailed analysis of climate change vis a vis projected fossil fuel consumption, describing what would be needed to meet the United Nations preferred scenarios for climate change mitigation. Their results were chilling, even though IEA still refused to say that we are now in the era of peak oil. Their primary conclusion, which should have been a wake up call to the entire world:

Current global trends in energy supply and consumption are patently unsustainable …The future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon, efficient and environmentally benign system of energy supply.

Here’s the new news: in late 2009, two IEA whistleblowers went public, claiming that IEA was, first, practically controlled by the U.S., and, second, that IEA had significantly downplayed the threat of peak oil. The UK’s Guardian newspaper reported in November: “A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was ‘imperative not to anger the Americans’ but the fact was that there was not as much oil in the world as has been admitted. ‘We have [already] entered the 'peak oil' zone. I think that the situation is really bad,’ he added.”

The peak oil issue is currently on the backburner for most policymakers and observers due to the fragile global economy. So while this decade may well be described by future historians as the decade that global oil production peaked, the end of the decade passed with very little public focus on this issue, even though oil prices are strangely high for a severe global recession (almost $80 a barrel at the time of this writing, far higher than the $37 a barrel low reached early this year but much less than the peak of $147 a barrel reached in July of 2008).

Here’s where the discussion gets even more interesting (at least for us policy wonks who take some occasional time off from reality TV). The 2009 WEO continued the IEA’s analysis of climate change scenarios, supplying additional detail and recommendations for international climate change mitigation efforts. The substantive change in the 2009 WEO was IEA’s first supply-side analysis of the world’s largest natural gas fields. Whereas the 2008 WEO had found a chillingly high decline rate for the world’s largest oil fields, the 2009 WEO found a surprisingly encouraging trend in natural gas production.

IEA concluded that new extraction techniques for natural gas, pioneered here in the U.S., are resulting in dramatic increases in natural gas reserves around the world. These new reserves make a transition to natural gas for electricity generation and transportation (in natural gas vehicles) a focus of IEA’s recommendations for climate change mitigation. Natural gas, while still a polluting fossil fuel, is considerably cleaner than coal and oil, so there is some merit to IEA’s arguments — if there is indeed as much natural gas available as they now believe. Time will tell if they’re right on this new analysis, but my feeling is that they’re not because I think a lot of the new data on production and field reserves comes from self-serving private sector analyses.

Moreover, there is almost no sense of urgency in the 2009 WEO regarding peak oil — this phrase is never even used in the document, as far as I can tell, despite the remarkable sense of urgency in the 2008 WEO. The rapid decline in global oil fields highlighted in the 2008 WEO is not even discussed in the summary. And despite the fact that their underlying analysis of global oil production and demand did not change substantially from 2008 to 2009 (despite some adjustments to account for the current recession), there was no warning of an oil supply crunch, which was highlighted by IEA officials in public comments throughout 2009, long after the recession was underway.

Indeed, Fatih Birol, IEA’s chief economist, stated in early December of 2009 that conventional oil production was likely to peak by 2020 unless major new discoveries are made (and these are highly unlikely). This is a huge turnaround in sentiment and lends strong support to the whistleblowers’ assertions that the U.S. has hijacked the IEA WEO process (yes, even the Obama administration is capable of such bullying).

To wrap up this admittedly esoteric discussion, here’s my conclusion: IEA and many other high-level policy types, including apparently the Obama administration, have decided to put all their eggs in the climate change basket. In other words, even though IEA and policymakers from every nation must surely be aware of the threat of peak oil (the IEA and many other agencies and non-profits have supplied ample data in this area over the last decade), they have decided that the vehicle for mitigating both peak oil and climate change is the int’l climate change mitigation process.

Due to the fact that mitigating climate change will also mitigate peak oil, and not vice versa, this would seem to be a smart choice. But this decision is, as we’ve recently seen from the current collapse of the UN process in Copenhagen, a major mistake. We need a new approach.  

The overarching international climate change mitigation target has been, for some time now, to limit global temperature rise to2°C or less, which is the non-binding target in the Copenhagen Accord. A recent push by Bill McKibben’s 350.org, the Association of Small Island States (AOSIS), and other groups, has been a 1.5°C target.

It is my view that even if this 1.5°C target had been enshrined in a legally binding document, to replace the Kyoto Protocol when it expires in 2012, it would still be generally ineffective by itself. This is the case because there is no viable enforcement mechanism for this kind of international agreement.

What really matters in the climate change and peak oil debates are national actions, based on a mixture of carrots and sticks. The Obama administration made serious progress on climate change mitigation when it dedicated about $80 billion to renewable energy and energy efficiency in the recovery package passed early in 2009. This is the carrot. If Obama and Congress follow up in 2010 with a national renewable electricity standard (25% by 2025, for example) and a modest carbon fee (tax), this will be the stick. If Obama can do this, he will have lived up to his promises on climate change and renewable energy, as far as he is able to, given current political realities.

As far as peak oil is concerned, however, we will have to do our best at the local and state levels to implement far more ambitious efforts to increase energy independence through a mix of energy efficiency, renewable energy and sustainable transportation. Market forces will be our friends in this process because we can expect much higher fossil fuel prices (again) as the global economy recovers — probably exceeding the record high prices reached in 2008 by 2011-2012.

In making your New Year’s resolutions, my recommendation is to remember the lessons of the oil shocks in 2008 and 1970s and work toward a long-term and sustained low-energy lifestyle. The decade of peak oil and climate change requires it.

Tam Hunt is president of Community Renewable Solutions LLC, a company focused on community-scale wind and solar energy; he is also a Lecturer on climate change law and policy at UC Santa Barbara’s Bren School of Environmental Science & Management.